Unemployment Down, So Is Optimism

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Unemployment Down, So Is Optimism

The U.S. job market held up better than expected in May as the unemployment rate eased, but a dismal reading on a key factory gauge showed the economy's troubles are far from over.

The jobless rate eased to 4.4 percent from 4.5 percent in April – defying economists' predictions that unemployment would tick higher. It was the first drop in the jobless rate since September of last year.

But several economists said the drop was misleading. It stemmed not from any strength in hiring trends, but from a large number of Americans leaving the work force and who were therefore no longer counted as "unemployed."

Employers trimmed a net 19,000 workers from their payrolls in May, marking the second straight monthly drop in jobs. The payrolls number – calculated from a separate survey than the one used to compute the unemployment rate – was in line with the 17,000 decline predicted by U.S. economists.

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Palm to make cuts: Palm said it would make new job cuts in its next fiscal quarter, even though it was gaining market share with its newest product.

The company said it would give more details on the job cuts when it announced fiscal fourth-quarter results the week of June 25.

Palm (PALM) said its U.S. retail market share had risen from 60 percent to 67 percent in the latest weekly survey by NPD Intelect, after its new organizer, the m500 handheld, became available in stores.

Palm shares rose 50 cents, about 9 percent, to $6.13 on the Nasdaq after the announcement, outpacing the broader market for the day although the stock has fallen nearly 80 percent this year and underperformed the Standard & Poor's 500 index by about the same amount.

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BlackBerry coming to Britain: Research In Motion (RIMM) said that BT Cellnet is now offering RIM's handheld BlackBerry e-mail device in Britain, a development that could spark a rush of orders for the product across Europe.

BT Cellnet, the mobile phone arm of British Telecommunications' wireless unit, is launching the device to corporate customers so they can stay connected to their e-mail accounts no matter where they are.

RIM's trendy Blackberry, which competes with many of the Palm devices, allows users to carry around their schedules and surf the Net with full e-mail capabilities.

The service will run on BT Cellnet's GPRS network.

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Atomshockwave scales back operations: Digital entertainment company Atomshockwave announced it would be shutting down two main offices and downsizing its 180-person workforce.

Specific layoffs won't be announced until next week, the moves came as part of an overall strategy to conserve its funding during the economic downturn, a spokeswoman with the company said.

The New York and Los Angeles offices will be shut down immediately, while the San Francisco headquarters remains open along with its satellite offices in England and Japan.

"We've just restructured the company," the spokeswoman said. "We've done this to reflect the change in the industry, but we're going to keep working on our distribution and syndication business models."

AtomFilms and Shockwave.com merged last December hoping to create a digital entertainment company that developed and distributed short films, video games and animated entertainment. In March, the new company managed to pull in $22.9 million in funding from Shockwave's parent company Macromedia and J.P. Morgan Entertainment Partners among others.

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PSINet files for bankruptcy: Internet access provider PSINet (PSIXE) said it and several subsidiaries have filed for Chapter 11 bankruptcy protection because they were unable to keep up with the rapid decline in demand for its services.

The company, with cash assets of about $300 million, said in a statement that 24 of its U.S. subsidiaries are included in the Chapter 11 filing, which took place in U.S. Bankruptcy Court for the Southern District of New York.